The world has dozens of conventional currencies, mostly with language/local politics providing natural borders. And you're right, most people (non-enthusiasts) don't care enough to trade on forex markets unless they have to.

That's why I think this analogy breaks down. While conventional currencies has the limitation of localization and a specific area of use, BTC doesn't. The fact that when I go to France I would have a hard time using USD and, thus, Euros would have value to me. The Internet is the Internet.

I know some people will say that different segments of the Internet could use BTC while others LTC and the rest Durpcoin or whatever. This would actually devalue all the coins. One, it negates the "no inflation" aspect of bitcoin because, well, these new coins all create de facto inflation. They are all pumping out infinite digital coins that some people accept. Second, it negates the "low fees" aspect of bitcoin as you'd have to pay an exchange somewhere down the line to just transfer your BTC to some other coin. Finally, it negates the "easy to use" as the fact that i just had to explain all this in a tl;dr paragraph proves it thus.

The final argument is then "Well, you can just accept both!" But why?! Why accept two when I can just accept BTC and get all the same benefits without any of the hassle I mentioned above?

A lot of people do still use local currencies though, so you might as well set up to only use one payment processing system and have that be one that just gives you the Crunch Berries you prefer and insulates you from everyone else's cocoa puffs, dollars, yen, francs, or whatever the heck they use.

A lot of people do still use local currencies though, so you might as well set up to only use one payment processing system and have that be one that just gives you the Crunch Berries you prefer and insulates you from everyone else's cocoa puffs, dollars, yen, francs, or whatever the heck they use.

-MarkM-

I can't tell, are you still arguing for Ripple?

If so, I consider BTC that payment processor. I think that Ripple is just trying to add an extra layer of complexity that, frankly, won't work.

Actually I am maybe even arguing for having everyone else use Ripple but appending to Ripple the actual gateway functionality.

Basically I am thinking it'd be nice if I could say yes I accept bitcoins, not bitcoin IOUs, please do go ahead and use Ripple to pay me but tell Ripple to pay me bitcoins, not bitcoin IOUs.

Maybe this would be accomplished by having a gateway account that sends me bitcoins, and I tell people my gateway account so they Ripple to it and it automagically cashes in the bitcoin IOUs it receives into actual on the blockchain bitcoins.

(Or devcoins, or litecoins, or whatever crunchy berry coins of the day I happen to like.)

Currently the alt-coin variants more or less copy the whole bitcoin idea, that makes them not attractive at all

If some currency will be a powerful competitor to bitcoin, it must solve some main drawbackes of bitcoin:

1. Early adopter problem

Early adopter problem has caused many people think that bitcoin is just a scam designed by those programmers. If one alt-coin will equaly benefit late adopters (e.g. you always get the most benefit when you first join the game), then that coin will immediately attract lots of users

Actually after some thought, I think this is more like an inflative money's character. An inflative money continuously devalue which hurt existing holders, but it does not hurt new money makers, they do not have any money from the beginning, so get money is much more beneficial for them than existing holders

Anyway, try to reduce the benefit of early adopters in the long run is the key here

2. Price stability problem

The fixed supply nature will cause bitcoin price to rise quickly and this caused high risk for merchants and consumers

This issue is closely related to the first problem, if the late adopters could get the same benefit as the early adopters, then the price will not swing that wildly

3. Scalability problem

An increased user base will cause increased memory, bandwidth and storage requirement, in order to scale very well, it should not handle all the local transactions in one network

Due to these 3 limitations (or features) of bitcoin, it will very likely become a store of value, not a medium of exchange. But currently people do not have a real good way to store value, there is a demand for such kind of commodity

For a medium of exchange, I think the best candidate should have a fixed base exchange price pegged to average standard living costs on the planet, and an unlimited but variable supply based on that exchange price (If coin price increase, difficulty goes down so that more coin can be generated per day). And it should be able to scale very well

Anyone who has spent 5 seconds thinking about it realizes that if LTC or whatever scam-coin succeeds then all crypto-currency fails.

So if BMW wins in terms of car sales, all car sales will plummet and the industry will die? Better rethink this over.

People keep making this analogy. People who make this analogy are not good at analogies.

The best coin will succeed. There is no need for one single coin only. In that respect, the analogy applies.

Sigh. So, let's say that there are 100 people in the world that want cars. Like, tops (simple explanation here). Let's say that one car company sells all those 100 their cars. If a new company starts, then yes, the value of the first company will be diminished. Now, in the real world the market is continuing to expand and the first company has many opportunities to make new products, expand the market, ect. None the less, the one thing we CAN say is that people are pretty convinced of the value of the car and will continue to want one, no matter who sells it to them. Hell, if I buy a car and two weeks later the company I bought the car from goes under, it's still a car that works. It drives me places.

And that is where your terrible analogy falls apart. LTC is a poor, script-kiddies copy of BTC in every important way. It does nothing significantly different than BTC. At the same time, there are people investing and working hard of getting people to adopt crypto-currency as viable, sustainable, and important. You know what undermines this? LTC. People are smart enough to realize that if any two-bit script-kiddie can just make up an alt-coin that actively devalues their investment, they're not gonna buy it. Who wants to play the "Oh, this new crypto-currency is better so you better dump everything right now and switch!" game? What good is an investment in LTC if, one-year from now, super-LTC gets released and does everything regular LTC does but maybe slightly different. What good is an investment in super-LTC if Mega-LTC comes out a year after that and does things just a little different.

And that, sir, is why your analogy is terrible.

Let's first start with your initial argument: 'Anyone who has spent 5 seconds thinking about it realizes that if LTC or whatever scam-coin succeeds then all crypto-currency fails'.

First of all, it contains a contradiction. If all crypto-currency fails, then LTC would fail as well, but that did not happen since your statement poses the element that LTC (or whatever scam-coin) shoud have succeeded for your statement to apply. But let's leave that as it is.

The analogy made with the car industry is to bring forward a though experiment why an industry as a whole would fail if one of the market players provides for the best solution at a given time? That industry collapse is not happening. It is quite the opposite: the industry has developed just fine under heavy competition. Weak companies vanished while strong companies flourished. The current players have to remain improving themselves and their products or lose out to the competition. The beneficiary is the customer. I fail to see why LTC succeeding would mean the end of crypto-currency.

That was the analogy made.

That's also were it stops, because a car is a single object that can be used stand-alone. You are quite right there. Crypto-currencies can be made in thousand variants but in order to be useful, they need to be used by a certain number of people. There is no use sending a McCorvic_Coin if you are running the only client of McCorvic_Coin.

But that still does not explain why the victory of LTC would mean the end of crypto-currency.

Wait, another bad analogy coming up: fiat-currency. We have tons of them, also in different varieties. Did not collapse, although we are getting there The simple fact that more than one type of currency exists, does not warrant the collapse of currency itself. The only thing that matters is use by people. Probably, sufficient use by people. I won't get into the history of fiat money and the practical matters thereof, but we can safely conclude that there are many types of fiat currency floating around without a collapse of fiat currency. So that does not seem to support your argument either.

Still digging a little deeper, I think that Bitcoin is actually meant to have competition. And that is where the analogy with the car industry, albeith limited; I give you that, comes up again. Competition can make or break Bitcoin. If it breaks Bitcoin, something else will take over. Bitcoin must be subject to competition (and be improved) because its source code is freely available. If Bitcoin cannot survive competition, it would not have lasted until today. The very essence of its existence proves that it can handle competition fine (until now). LTC may take over (although I doubt it; not innovative enough), and if so it will be because the people have chosen so by their actions.

People will chose their crypto-currency of choice with their feet. It could be Bitcoin, but also Litecoin, Namecoin or PPCoin. Many practical matters will influence these choices, as is the case (duck: another analogy...) with me using euro instead of USD, while it is no problem for me to exchange these two currencies if needed. Preferences shift over time: it happens all the time and this will not be different for free market phenomenons like crypto-currency. It is not a given that such shift in preference will lead to the collapse of crypto-currency as a whole (one will be less valued over time and the other valued more).

The important features that Bitcoin as granddaddy gives us (near free, decentralized, uncontrollable and instant payments all over the world) will live on now that the cat is out of the bag. Whether Bitcoin will survive or not is not the question. In my perception it is not which coin will survive that is at stake, but finding a good, wide spread and long lasting use for crypto-currency's unique features. Like in getting your mom to use them (and yes, that is a very long road ahead )

I would very much like Bitcoin to succeed, but if better coins appear, nothing is holding back the public (including me) to jump on another train. The first who can manage to develop a coin that has the additional feature of instant payment (without 6 confirmations needed) while being as secure as Bitcoin, has a real prospect of having a winner within reach. Either Bitcoin assumes this innovation, or is left for dead. It's nature in the digital realms....

The public does not always chose the best solution and may chose LTC's features in the end over Bitcoin. That's not for us to decide but by the one's making a crypto-currency a success: its users as a whole.

If you liked this contribution, you may donate any excess Litecoins to the following address: LcjnwSZHMTASjtR2gNSxwfXueceEm8Ggb2

Yes, competition is good. The Bitcoin community should work hard at making Bitcoin as good as it can be to ensure the network effect takes hold and makes it as difficult as possible for an alt-coin to gain market share. This doesn't mean that an alt-coin would ultimately have to cease to exist, it just means that Bitcoin should capture the bulk of the new adopters of digital currencies such that Bitcoin enjoys a better growth rate (and hence, appreciation in value) than these competitors. The altcoins could still exist and serve some niche markets.

Is it likely bit pay etc. could offer checkout in any alt-coin of choice?

Yes, but not in the way you think. Here's some insight into our thought process on this question: Bitcoin is currently the most secure method of electronic payment on the planet. The network of miners is what provides that security and today it vastly exceeds that of any altcoin. Bitpay will use the most secure and private payment method available for the actual transaction. But that doesn't mean you couldn't use Litecoin, you just need a wallet that can automatically exchange Litecoin for Bitcoin just prior to a transaction. Should something disastrous happen with Bitcoin and Litecoin became the most secure method of payment, we would transition to using Litecoin for the payment mechanism (and then you would need to exchange your Bitcoins for Litecoins just prior to conducting the transaction).

So, when I think about Litecoin (and the other alt coins), I think of it in terms of:- providing that competitive pressure to Bitcoin that you allude to- being a contingency solution should something disastrous happen to Bitcoin- being of some utility for people that might like to have transactions that aren't visible on the Bitcoin blockchain

In view of recent events I've come to the conclusion, even if it's only for the bold portion above, supporting litecoin is essential, it's similarity to Bitcoin is a stregnth not a weakness.

In view of recent events I've come to the conclusion, even if it's only for the bold portion above, supporting litecoin is essential, it's similarity to Bitcoin is a stregnth not a weakness.

Agreed, bitcoin has reached a maturity/complexity level that politics has become a big concern, there is no existing clear governance structure. The increase of mining power after ASIC release forced many people out the game. LTC on the other hand are relatively young, and GPU is available everywhere, it does not have those problems right now

Imagine that one day, bitcoin forked into two chain because of the conflicting interest of different involved parties, while LTC keep a promise of never change the existing protocol (ironically, it is because no developers are messing with the code ), I guess LTC price will bypass BTC

Then BTC will become a medium of exchange that can satisfy increased transaction volume with larger and larger block size, the price stays stable. And LTC becomes a store of value that could not handle too much transaction but the price is rising 50% per month, everyone is eagerly waiting in line to get their transaction in queue

Then BTC will become a medium of exchange that can satisfy increased transaction volume with larger and larger block size, the price stays stable. And LTC becomes a store of value that could not handle too much transaction but the price is rising 50% per month, everyone is eagerly waiting in line to get their transaction in queue

Why would people invest in a crypto-currency that can't even run it's own network and approve transactions? If it got to the point where the transaction list was so far backlogged that people could't even spend their money, I'd say that crypto-currency has pretty much failed.

I sent some 'dust' today resulting in 100 pieces for a 0.36 BTC transfer. Took hours to complete 6 confirmations. If small payments are a problem, there is a future problem that needs to be sorted out.

I understand the concept of 6 confirmations, but preferably it remains within the 10 minutes time frame and never takes longer.

Competition motivates people a bit, but the biggest motivation in human life is cooperation (just think about relationships). You can't start a successful business without any employees and it won't be successful without partnerships.

Then BTC will become a medium of exchange that can satisfy increased transaction volume with larger and larger block size, the price stays stable. And LTC becomes a store of value that could not handle too much transaction but the price is rising 50% per month, everyone is eagerly waiting in line to get their transaction in queue

Why would people invest in a crypto-currency that can't even run it's own network and approve transactions? If it got to the point where the transaction list was so far backlogged that people could't even spend their money, I'd say that crypto-currency has pretty much failed.

The reason is simple: price rise 50% per month, because limited supply, no one change the protocol, stable like a rock. People will bid up the transaction fee to make the processing faster

Why would people invest in a crypto-currency that can't even run it's own network and approve transactions? If it got to the point where the transaction list was so far backlogged that people could't even spend their money, I'd say that crypto-currency has pretty much failed.

Exactly! If it gets too popular, nobody will want to use it. Just like restaurants that are so crowded you can't even get a table -- nobody goes to those.

I am an employee of Ripple. Follow me on Twitter @JoelKatz1Joe1Katzci1rFcsr9HH7SLuHVnDy2aihZ BM-NBM3FRExVJSJJamV9ccgyWvQfratUHgN

Competition makes anything better. Competition promotes excellence and prevents any one company (or person or idea or whatever...) from becoming the rule-maker for everyone. Competition promotes stability in prices and prevents gouging. It allows for the best stuff to float to the top.

I hope litecoin gives bitcoin a run for its money. They, and we, will be better for it.

Why would people invest in a crypto-currency that can't even run it's own network and approve transactions? If it got to the point where the transaction list was so far backlogged that people could't even spend their money, I'd say that crypto-currency has pretty much failed.

Exactly! If it gets too popular, nobody will want to use it. Just like restaurants that are so crowded you can't even get a table -- nobody goes to those.

A better analogy would be a telephone network that only allows a global maximum of 10 calls to take place at any given moment and refuses to increase capacity no matter how many subscribers it has or how much they are willing to pay to make a call.

Bitcoins have no value to someone who isn't actually able to use them, just like a telephone isn't useful if you can't actually call anybody.

A better analogy would be a telephone network that only allows a global maximum of 10 calls to take place at any given moment and refuses to increase capacity no matter how many subscribers it has or how much they are willing to pay to make a call.

Bitcoins have no value to someone who isn't actually able to use them, just like a telephone isn't useful if you can't actually call anybody.

Well, this would make the telephone calls extremely valuable, at least until someone else built a better telephone network.

If the capacity of the network is limited, transaction fees will be bid up. Only the "most important" transactions will go through. The network will still be extremely valuable so long as there *are* important transactions. But it will also be vulnerable because there will be a large area of need (admittedly lower in value per-transaction but still a huge amount in total) that it won't be serving.

I am an employee of Ripple. Follow me on Twitter @JoelKatz1Joe1Katzci1rFcsr9HH7SLuHVnDy2aihZ BM-NBM3FRExVJSJJamV9ccgyWvQfratUHgN

I have yet to hear this theory articulated by anyone who doesn't have a conflict of interests in this area. Nor has anyone ever been able to give me an example in the real world where making a service deliberately less useful causes its value to increase.